LONG BEACH — Police on Thursday announced the arrest of an East Long Beach man following a 1 1/2-year investigation into his medical marijuana cooperative, which authorities charge is simply a front for illegal drug sales. | VIDEO

Long Beach Police Chief Jim McDonnell announced the arrest of Jon Storms, 44, for possession of marijuana and possession of marijuana for sale the day after police served warrants at nine locations throughout Southern California, including Storms' home near El Dorado Park.

The married father was released the same day, but he faces further felony counts of drug dealing and money laundering, McDonnell said.

The chief said Storms applied for one of the city's medical marijuana permits on June 14, 2010, before Long Beach had banned large collectives. Storms was denied, but he continued to operate his North Long Beach operation, McDonnell said.

"This investigation will show the amount of money generated by illegal dispensaries and the profits made by criminals who run them," he said during a press conference Thursday.

According to McDonnell, Storms was raking in a gross revenue of $1 million to $2 million annually from drug sales.

Attempts to contact the Storms for comment at their home Thursday were unsuccessful.

Storms was released, in part, because of the sheer volume of evidence that will require several days to inventory, the chief said. Investigators hope to meet with the Los Angeles District Attorney's Office next week to determine the full extent of the charges that Storms will face.

His cooperative was flagged for investigation after the city placed a ban on all collectives that contain more than three owners or partners in February.

The city had attempted to regulate and control medical marijuana operations, which are allowed by the state, but an appeals court shot down the permitting ordinance because it violates federal law.

Storms' operation is not, by any means, the only collective under investigation, the police chief stressed.

Cash, guns and marijuana were taken from Storms' homes and businesses, which include two tanning salons, located at 4180 Viking Way and 1714 Clark Ave., both in Long Beach; a bikini shop and a limousine rental business, both located on Viking Way; and Storms' most recent purchase of the El Dorado Restaurant at 3014 N. Studebaker Road, McDonnell said.

More than $800,000 cash was found during Wednesday's and Thursday's searches, much of it in a safe inside Storms' East Long Beach home. Marijuana was seized at Storms' collective, the Long Beach Quality Discount Caregivers at 1150 San Antonio Drive, the chief said.

Multiple teams of officers from numerous agencies served the warrants and found evidence at Storms' opulent riverfront vacation homes in Needles, on the California-Arizona border, and at properties in Mira Loma, Corona and Signal Hill, McDonnell said.

An additional six properties in Nevada also were searched.

Among the items seized locally were 14 rifles, 17 handguns, three shotguns, body armor, 17 collectible vintage cars, one truck, one boat and three personal watercraft, the chief said.

The agencies working with the Long Beach Police Department on the investigation include the federal Drug Enforcement Administration, the Los Angeles Interagency Metropolitan Police Apprehension Crime Taskforce (LA IMPACT), the state Franchise Tax Board and the Los Angeles County District Attorney's Office.

The chief and Mayor Bob Foster started the 5 p.m. press conference Thursday by noting that when voters' passed Prop. 215 and Senate Bill 420, they were supporting compassionate use of marijuana for terminally or seriously ill patients and that the marijuana was to be distributed through non-profit collectives.

"This is clearly not a nonprofit institution," the mayor told reporters.

McDonnell noted that the so-called collective was run like a for-profit business, offering coupons, discounts on the first and 15 th of every month, free pipes and free marijuana on certain days to the first 20 customers to come into the dispensary.

"If this had truly been a nonprofit collective, there would be no need to provide an incentive for members to purchase more of what is already theirs," the chief said.

Storms' wife, Holly Westover Storms, also known as Hollie, was also detained and questioned Wednesday, though she wasn't arrested, authorities said. The investigation into her involvement, if any, in the alleged drug dealing and money laundering operation remains ongoing, police said.

Department of Children and Family Services agents who accompanied police took care of the couple's two daughters while police searched the family's East Long Beach home. Whether the girls could be removed from home is pending an evaluation by DCFS authorities, police said.

Also seized from Storms' house were several dogs, many of them pit bulls that police said were used for security on the property. Whether they will be returned to the home is also pending investigation, authorities said.

Before facing these new potential battles, the Storms had already been fighting the city over its denial of a temporary entertainment permit for the recently purchased El Dorado Restaurant, which is a few blocks from the couple's home.

Several residents in the area said they were shocked when the permit to have live entertainment was denied at the restaurant and bar, which has operated at the location for over half a century.

Just this Tuesday, several residents, including a local pastor, spoke at a City Council meeting in support of granting the restaurant an entertainment permit.

"When I heard about the drugs and money laundering, (the permit issue) made sense," said Bill Williams, who lives in the area and often goes to the bar.

He and other neighbors said the couple gave legendary parties at their home with the best food and drinks, and, some said, drugs.

The home, which sits in the 7000 block of East Mezzanine Way, appears from the outside like most of the single-story Cliff May Rancho homes in the neighborhood. It's a nice area but not as upscale as Naples or the Virginia Country Club.

Inside the home, however, it's a different story, neighbors said.

Residents described Italian marble counters, crown moulding, the most expensive appliances, a home entertainment system and a high-tech security system.

Men in the neighborhood often gazed enviously at the seemingly endless supply of vintage and custom automobiles Storms drove around the neighborhood, as well as his two custom West Coast Choppers motorcycles, neighbors said.

Around Storms' local businesses, neighbors said they hadn't noticed anything that would raise eyebrows.

Ellen Davis, owner of Aunt Fanny's Emporium in Parkview Village on Viking Way, said that in the 13 years that she has been there, she has never noticed anything unusual about Storms or his shops.

"It's calm, and I know that they get a lot of customers at the stores and they are always very busy," she said. "I'm pretty suspicious minded, and I've never seen anything suspicious about him or the store. I've been over there a few times and his girls have been here many times, too. Nothing weird."

An employee at Storms' California Tan shop wouldn't comment.

During the press conference, McDonnell referred to a chart to show how the money from the collective added up, noting that illegal dispensaries purchase marijuana at a cost of $1,500 to $3,500 per pound, then sell it at $20 to $40 per gram. That results in a net profit of $5,500 to $16,600 per pound, McDonnell said.

For Storms, the chief said, that resulted in an annual gross revenue of $1 million to $2 million.

"As you can see, there is a tremendous amount of money in this," the chief said. "You can see why we have involvement by gangs and by organized crime in many of these dispensaries throughout the Southland and why we take this issue so seriously."